Church of Scientology files late return amid crackdown on financial reporting laws

Sunday Star Times, New Zealand/May 15, 2016

By Beavan Hurley

Churches are spending hundreds of thousands of dollars to comply with a new crackdown on charities' financial reporting standards.

The Church of Scientology filed their annual returns last week, more than 10 months overdue. They received nearly $1.4m, and spent just under $600,000.

Charities who spend more than $1m per year are being forced to open up their books, in some cases for the first time, under new laws which came into effect this month.

The Charities Service say the new laws will bring greater transparency in the sector, but churches say they are having to spend up to $100,000 on auditing fees.

The Scientologists, who attracted attention from documentary makers in the United States for their unconventional practices, were also late filing their returns in 2012.

Church secretary Mike Ferris said their accounts were delayed due to their move into a newly restored $16m heritage-listed building in central Auckland.

"We had to relocate our premises and that interrupted a whole lot of things."

Ferris, who has been a Scientologist for several decades, declined to comment on his arrangement with the Charities Services, adding their communications were private.

He said the church didn't spend enough to be independently audited and had never been previously audited.

The Church of Jesus Christ of Latter-day Saints is among other large charities opening up their books to independent auditors.

Donations to the church, commonly known as the Mormon church, have nearly doubled in the past two years to $87 million. Martin said this was due to fundraising efforts around the church's Temple View housing development in Hamilton.

The church's Pacific financial controller Doug Martin said the church was happy to comply with the changes, even though an independent audit would cost close to $100,000.

"I think (the law change) will be a significant step up for some in the charities sector."

Sixteen charities received more than $10m in donations last year, including five churches.

Destiny Church spokeswoman Anne Williamson said their church regularly opened up their books for audits.

"The Charities (Services) ave been very proactive in letting us know what's required. We carefully thought it through, it's something that we've had to get ourselves ready for."

Destiny were issued overdue notices when they filed late annual reports in 2014, but have since been on time in filing their returns.

Brian Tamaki has attracted for controversy for encouraging followers to tithe to pay for the church's 'City of God' in south Auckland.

But figures show donations to Destiny Church have remained steady since they moved into the premises.

Charities have been under closer scrutiny, with more than 1000 being deregistered for not filing donation details in 2015.

Massey University associate professor of religious studies Peter Lineham said the increased level of reporting would make it too hard for some to survive.

"It's getting very hard to run a charity these days. The will may be there to upskill but for volunteers who are doing a full time job it may be out of the question."

General Manager of Charities Services Lesa Kalapu said the changes were just starting to take effect, and would impact on all 27,000 charities.

"The whole drive behind it is to have more transparent information about the charities industry."

It was revealed the Exclusive Brethren church had told its followers worldwide to pray for the IRD after receiving a favourable settlement in a dispute over school fee donations.

Charitable status

* For charities with an annual expenditure of $1m or more: Financial statements must be audited by a qualified accountant

* If spending is between $500,000 and $1 million: Financial statements must be reviewed by a qualified accountant

* Less than $500,000: Can choose to have their financial statements reviewed or audited.

* NZ's registered charities receive about $1.2b each year in donations.

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